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Pepsi Earnings Show Strong Snack Demand

PepsiCo (NASDAQ: PEP) on Thursday reported robust global sales growth at the close of its fiscal 2019 year. The company also projected steady revenue gains in 2020, along with a return to earnings growth.

Image source: Getty Images.

What happened?

Pepsi's organic sales rose 4.3% in the fourth quarter of 2019, which translated into a 4.5% increase for the full year. That result edged past the 4% target that management had initially forecast thanks mainly to gains in the Frito Lay snack division. The consumer staples giant also beat its own outlook for cash flow and operating income .

It wasn't all good news in the report, as Pepsi's beverage business grew by just 3% in 2019 compared to 6% for rival Coca-Cola (NYSE: KO). The company also posted weaker profitability as core earnings fell 1%.

What's next?

Pepsi predicted a steady year ahead for sales growth, with gains likely landing at 4% for the third consecutive year. Coke's outlook is a bit brighter, calling for 5% growth in its more focused beverage portfolio.

Pepsi also projected a return to earnings growth in 2020 as per share profits rise 7%. The company is again expecting to invest heavily in supporting its beverage and snack foods portfolio. However, its 2019 price increases and cost cuts should allow for faster earnings gains this year, management says.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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